International Financial Firms Put Faith in Modi Government's Budget

Union Budget 2014-15: Morgan Stanley has expressed hope that the Modi government would bring about policy reforms.

After the German Deutsche Bank expressed confidence about the central government's intent on taking bold steps in the Union Budget 2014-15, American financial firm Morgan Stanley has also expressed hope that the Narendra Modi government would bring about policy reforms and improve business environment through the Budget.

The American brokerage firm in its recent report stated that the first Union Budget to be presented by the Modi government would hold a reform agenda and hoped that it would improve the business environment that has been slacking in the country.

"The decisive election outcome suggests that the new government should be able to implement reforms that improve business sentiment and boost private investment," the brokerage firm said in its report, according to the Press Trust of India.

Morgan Stanley is a multinational financial services corporation headquartered in New York City. Morgan Stanley also said that it hoped the Budget would bring policy reforms, in order to beat inflation and boost growth.

"Policy reforms are much needed to ensure that the country transitions out from stagflation to an environment of higher growth and lower inflation," the firm said in its report.

The report talks about how the business environment in the country has been eroded because of several problems in the past government. Policy uncertainty, corruption-related probes and regulatory hurdles have led the business environment to deteriorate, it said.

"The first area on which the new government will focus is improvement in the business environment, which has remained challenging since the credit crisis. The Budget is likely to stress the need for improving business environment apart from providing a framework to streamline project approvals," the report said, with a mention of the need to provide clarity on the retrospective taxation issue which has dented investor confidence.

In its report, the firm further hoped that the government would lay a roadmap to improve growth and investment.

"Given the weak growth driven by sluggish investment and consumption coupled with high inflation, it is pertinent for the government to come up with a holistic roadmap to improve the growth outlook," it added. "The government needs to cut back on less effective redistributive polices and implement reforms that will boost productive investment and job growth."

A Deutsche Bank research note released earlier had said that the Modi government had taken some "bold decisions" to address inflation, and that the Union Budget could entail some "bold steps" as well.